The cap is a dollar figure. Your premium is not.
Public Act 152 limits what a Michigan public employer may contribute toward employee medical coverage, and it does it in dollars rather than percentages. So when the premium rises faster than the cap, the difference lands on the employee, every year, automatically. That is the design, and it is why the election you make each autumn matters more than most boards realize.
What you may contribute, per employee, per year.
These apply to medical benefit plan coverage years beginning on or after 1 January 2027. Treasury adjusts them annually.
Single Coverage
$8,180.35
Two-Person Coverage
$17,107.66
Family Coverage
$22,310.11
Published by the Michigan Department of Treasury. The figures rose roughly three percent over the prior year, well below what medical trend has been running, and that gap is the mechanism worth understanding.
You choose once a year, and the default is not neutral.
The election has to be made before the start of your medical benefit plan coverage year. Let it lapse and the hard cap applies whether it suits you or not.
The Hard Cap
The dollar figures above, per employee, by coverage tier. Simple to administer and unforgiving in a year when rates move, because every dollar of premium above the cap belongs to the employee. The caps are adjusted each year, so check the current figures before budgeting.
The 80/20 Option
You contribute no more than 80 percent of the total annual cost and employees carry at least 20. It moves with the premium rather than against it, which protects employees in a hard renewal year and costs the employer more.
The Exemption
A full opt-out, by vote, renewed annually. It is not open to every public employer and the mechanics differ by entity type, so this is the option that needs your counsel rather than a web page. Build the vote into the calendar well before the plan year.
The squeeze is arithmetic, not politics.
A Cap That Rises Slower Than Trend
Caps adjusted by roughly three percent against a market where Michigan small group carriers filed for 11.1 percent for 2026 and national employer trend ran 9 to 10 percent before plan-design changes. Each year the fixed contribution covers a smaller share, and the shortfall transfers to employees without anyone voting for it.
Which Makes Plan Design the Lever
If the contribution ceiling is fixed by statute, the variables left are what the plan costs and how it is funded. That is the work: reading the renewal against the cap before the election deadline rather than after, and modeling whether a different design or funding structure keeps your people whole.
General information about Public Act 152, not legal advice. We are benefits consultants, not labor counsel. Exemption votes, bargaining obligations and collective agreements belong with your attorney, and we work alongside them.
Opting Out and What Happens If You Do Not Comply
Local Unit Exemption
A local unit of government can exempt itself by a two-thirds vote of its governing body before the coverage year begins. Section 8(2) requires another two-thirds vote before each later year to extend it. Public bodies should have counsel confirm the vote requirements, the timing and the record to keep, since a missed step can leave the employer subject to the cap. Put the exemption votes on the board calendar.
State Revenue Penalty
Noncompliance can cost the employer 10 percent of its economic vitality incentive program payments, and the Department of Education assesses 10 percent of qualifying school aid payments. Because the financial consequences can be significant, public employers should confirm their position early with counsel and their adviser, and should not wait until a payment is withheld to find out they were out of compliance.
Timing Matters
The election and any exemption must be adopted before the plan year begins. Put the dates in your renewal calendar. Boards often meet only monthly, so build in time for review, public notice and any required vote ahead of the deadline. Missing the window can limit the options available for the year, so calendar it early.
Why It Matters at Renewal
A premium increase can push a plan over the cap, which shifts cost to employees or forces plan changes. Model it before the renewal arrives. Ask your adviser to test several renewal outcomes against the cap and to show what plan design, contribution or carrier changes would be needed. Starting the analysis early leaves time for board approval and employee communication.
What public employers ask about PA 152.
What are the PA 152 hard cap amounts for 2027?
For medical benefit plan coverage years beginning on or after 1 January 2027, the Michigan Department of Treasury set the limits at 8,180.35 dollars for single coverage, 17,107.66 dollars for two-person coverage and 22,310.11 dollars for family coverage, per employee per year. Treasury adjusts the figures annually and publishes them ahead of the coverage year.
What is the 80/20 option under PA 152?
Instead of the fixed dollar caps, a public employer may elect to contribute no more than 80 percent of the total annual cost of the medical benefit plan, with employees covering at least 20 percent. Because it is a percentage it moves with the premium rather than falling behind it, which usually protects employees in a year of sharp increases and costs the employer more than the hard cap would.
Can a Michigan public employer opt out of PA 152?
Some can, by an annual vote to exempt, and the exemption must be renewed each year. It is not available to every public employer and the voting mechanics differ by entity type, so this is the option to take to your attorney rather than decide from a summary. A 2014 amendment removed the exemption route for cities above 600,000 population.
When must a public employer choose between the hard cap and 80/20?
Before the start of the medical benefit plan coverage year. The election is annual, and if it lapses the hard cap applies by default, whether or not that is the outcome the employer would have chosen. Put the election on the governing body’s calendar well ahead of the plan year.
Does PA 152 apply to school districts?
Yes. The act reaches public employers generally, which includes school districts alongside cities, villages, townships and counties. School employers face the same annual election and the same tiered dollar limits. The exemption is the option that differs, since it is not open to every type of public employer, so a district should confirm with counsel which options apply to it. See school district employee benefits and how public employers run the comparison.
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The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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